How do rich people get rich?
An upcoming book by Kaye Thomas explains in plain English the secret of succesful investing: Turning money into more money.
While everyone goes through good times and bad times, the 1980 Harvard Law School graduate suggests sticking to four main rules for success:
1) Create and maintain a regular programme of saving, in an amount that makes sense relative to your income level and financial goals.
2) Create and maintain an appropriate division of your money between bonds and stocks, in a ratio that makes sensein relation to your time horizon and risk tolerance.
3) Within each division, create and maintain good diversification.
4) Keep investment expenses to a minimum.
“Every investment has two sides. A great deal for one side is a lousy deal for the other, and no one wants a lousy deal. When investment looks amazingly good, ask yourself why would offer to enrich you at his expense. Ask yourself why isn’t everyone buying this investment if it’s so great. The better an investment looks, the more likely there’s a hidden catch,” Thomas writes.
“Disastrous investment results can nearly always be traced to a violation of one or more of these rules,” he says, adding that the easiest way to follow these rules is to invest in low-cost index funds.
So now you have no excuses.